Treasury Secretary Jack Lew on State of the Union – Video and Full Transcript
In an interview airing Sunday on CNN’s State of the Union with Candy Crowley, Treasury Secretary Jack Lew spoke about Detroit, the economy, and whether the Obama administration wants more tax hikes. Lew also weighed in on Eliot Spitzer’s candidacy for New York City comptroller and the future leadership of the Federal Reserve. Video links are below, and a full transcript is after the jump.
THIS IS A RUSH FDCH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CANDY CROWLEY, CNN HOST: Treasury Secretary Jack Lew is here. Thanks for coming by.
JACK LEW, TREASURY SECRETARY: Good to be with you, Candy.
CROWLEY: I want to have a general question about the economy and play for you something the Speaker of the House said this week.
(BEGIN VIDEO CLIP)
JOHN BOEHNER, SPEAKER OF THE HOUSE: The president pivoted this week to jobs as he has been known to do on occasion. And under the president’s leadership, our country has fallen into the new normal of slow growth, high unemployment and stagnant wages.
And I think it’s unacceptable.
(END VIDEO CLIP)
CROWLEY: Take his characterization of the economy.
Is there anything in there, slow growth — would you agree with that?
LEW: You know, Candy, I think the characterization does not reflect where the economy is or where it’s come from. I think if you look at where this economy was four years ago, it was in free fall. We had to come out of the deepest recession since the–
CROWLEY: But I don’t think he, he was not suggesting–
LEW: — Great Depression.
CROWLEY: Right. He’s not suggesting that this is better than it was in that first year but where is it now? Right now?
LEW: I think if you look at where it’s come, we’ve had 40 months of job growth, four years of economic growth and the president’s the first to say that we would like to grow faster and we’d like to be creating more jobs and we need policies to do that.
That’s what he did this week. He gave a speech about what it takes to build a stronger, more vibrant middle class.
CROWLEY: Would you agree that it’s slow growth?
LEW: The economy, the core of the economy is showing signs of health and the resilience of the American economy and of the American people is showing through.
I think that what the American people need is for Washington to do its work, for Washington to stop creating crises and for Washington to concentrate on the things that the president spoke to in his speech, making sure that the American family can have jobs, security in their home and in their health care, education for their children and a secure retirement.
And the sooner we get on with that debate, the better.
CROWLEY: And so just to get your description of the economy right now, do you disagree that it’s slow growth, too slow? It’s growth. We — I think everybody —
LEW: Candy, I just came back from a meeting of the finance ministers of the 20 largest countries in the world. And I have to tell you that we’re doing better than most other countries in terms of recovery from this recession. They look at us and they say that we did something right. We took decisive action in 2008, 2009, 2010.
We got our economy growing. We’ve fixed our financial system. We have some challenges here. The president spoke to that. We have disparities in distribution of opportunity and wealth. We have the need to make that American who wants to work full-time can have a middle class life.
CROWLEY: Let me talk to you about the disparities. One of the things we have seen is that median family income has fallen over the past decade. The — according to the Census Bureau, about a quarter — 25 percent of American households have an income of $25,000 orless. The economy, while improving, unemployment, while coming down, does not seem to be creating good jobs.
Why is that?
LEW: You know, Candy, this is a problem that’s been decades in the making. And it’s something that we need to attend to and the president actually spoke to that in his speech in the middle of the week.
I think that if you look at the beginning of this year, we made an important step in terms of reducing some of the inequality by having tax rates for the most wealthy return to where they were before the tax cuts in the early 2000s. We made the first clear step to addressing some of the inequity in a very long time.
There’s no substitute to growing the economy and growing jobs and creating middle class jobs for people to — who have the skills and the desire to work. Our job in the government is that the conditions so that that can happen.
And we know what we need to do. And we know that if we were to focus on things like infrastructure and education and training and building manufacturing hubs, we make progress.
Washington has been distracted for too long with the hyperpartisanship. And we need to focus on what it’s all about and what we’re trying to accomplish. And we need to do that for the American people.
CROWLEY: Again, just sort of addressing the jobs that are coming back, what happened to the good paying jobs?
Where are they?
LEW: Well, look, there are still a lot of good paying jobs in America. And I think that, you know, you look at the —
CROWLEY: There are fewer, though; you would agree with that?
LEW: I think the challenge of creating more opportunities for people who want to work full-time, to have middle class lives, is at the heart of what the president was talking about this week. I think we know that we’re not going to have the economy of the 1900s. We’re going to have the economy of the 21st century. We know that that requires skills training. We know that that requires know that that requires that kids get early–
CROWLEY: So we’re moving away from the industrial jobs that created the middle class.
LEW: You know, I visit factories when I go around the country because I think one of my jobs as Treasury Secretary is to make sure I’m connected to what they call the real economy, where people are producing things.
And it’s really quite striking when you go into a factory and you see that the people who are making things are working with technology and computers. And you need to get a good education. So when we talk about early childhood education, when we talk about science and math education, that’s part of what it takes to make sure that we have a strong middle class.
CANDY: Sure, but that’s a long way from here though is-
LEW: If all we talk about is cutting and we don’t talk about investing, we can’t build our way to a better future.
CROWLEY: Understood. But a lot of these things — infrastructure projects and some of those — can start up within a reasonable amount of time. But educating a populace, that takes a long time to educate a kid.
In the near term, right now, we have a lot of part-time sort of lower paying jobs.
Is there any kind of fix for that?
LEW: Candy, there’s no doubt that early childhood education is a long way from a full-time job. But I think if you look at our economy today, we have roughly 3 million jobs that are open and people may not have the skills for them. We have high schools and community colleges that can train people for those jobs if we can make those connections and make sure the resources are used well.
I think that we’re — we have things we can do in the short term and that’s the kind of thing we ought to be talking about.
CROWLEY: I want to point out a particular segment of the workforce for you, and that is African-American unemployment now stands at 13.7, roughly where it was in early 2009.
Nonetheless, this is the very group that the president talked about, at least partially, that, you know, he’s talking about younger African-Americans, but African-Americans as a whole who have not always felt a part of this society.
Don’t these numbers, where African-American unemployment is the highest of all the sort of subgroups, cry out for a specific solution aimedparticularly at that community?
LEW: Candy, I think if you look a little bit more broadly at the unemployment trends, we’re seeing theoverall unemployment rate come down. It’s still too high but as we continue to grow, you can see how it’sgoing to start coming back to more normal levels.
There is a stubborn high unemployment rate for people who’ve been unemployed for a long time. And there are pockets of the population that we do have to worry about reaching and not leaving them behind.
I think we have to worry about the young people who graduated from school during the depths of the recession who have a gap in their résumés.
CROWLEY: Sure. But 50.7 is pretty high for the African-American population — it’s twice as high as the general number. But the president’s kind of always resisted sort of specific programs, saying you know, the rising tide lifts all boats.
Do you think this requires specific action?
LEW: Well, I think when you look at — when we talk about skills training, when we talk about education, it’s very much aimed at making sure that all of our young people get the skills they need to compete in the 21st century. We mean that regardless of race and regardless of where you live. And we’re not going to rest until we’ve made progress reaching the hard-to-reach population.
CROWLEY: As you know, one of America’s former great cities, Detroit, has — is trying to file for bankruptcy, at any rate.
Is there a federal bailout for Detroit?
LEW: Candy, Detroit’s got serious financial problems. They’ve been a long time in the making. We stand with Detroit and have been working with them, the technical advice, working with the kinds of normal programs the federal government has to see if there’s anything we can do to help in the Treasury Department.
I’ve made resources available for helping to take down blighted properties, to help communities come back from the recession. I think the issues that Detroit has in terms of problems with its creditors it’s going to have to work out with its creditors.
CROWLEY: You know, we bailed out big banks. We bailed out the auto industry. We bailed out speculative homebuilders. And here is a major American city where, by the way, the minority population is the overwhelming is the majority population. And there’s no help from the federal government.
It seems — I think people would look at that. I would look at that and say, well, why would you bailout the auto industry but not an entire American city that’s gone bankrupt?
LEW: Let’s be clear, Candy, in the middle of the economic crisis, we were saving the American economy. We were in freefall. If we hadn’t taken decisive action, we would have had a massively worse problem than what we even had.
So I think the situation in 2009-2010 was unique. And it’s something that hopefully we never see again.
CROWLEY: But no major federal help that you can see for Detroit? That’s all?
LEW: Well, we stand with Detroit and we, through the normal federal programs, will continue to work with them.
CROWLEY: But you don’t see a special — what I’m — what I’m getting at it’s kind of horrifying to look — and, by the way, there are a number of cities that seem to be in the same kind of — headed down that same financial road with huge pension and health care obligations that they’re unable to meet. And Detroit has just sort of shrunk before our very eyes. This is something that Detroit has to workout?
LEW: Detroit has serious challenges. We support Detroit in its efforts. But Detroit’s going to have to work —
CROWLEY: Kind of moral support?
LEW: — with its creditors.
When looking ahead for the next three years of the Obama administration, do you see new — more new taxes coming down the pike in any of those three years?
LEW: You know, Candy, we’ve had debates about taxes for a long time in this country, in Washington. We made some progress at the beginning of this year, really responding to your earlier concern about the distribution of equity and opportunity. We’ve closened (ph) the gap by raising tax rates on the very high end.
We still have a gap in terms of the amount of revenue we need to make sure we can support all of the things that we do in this country.
It’s not as big as it was because we’ve moved partway there. The challenge is how do we get away from the kind of day-to-day, who’s up, who’s down, what’s the score in the Washington debate and how we focus on what we need to do to build the economy for the American people going forward.
And if we couldn’t come together and agree on how to make those investments that we’re talking about, to make sure that there are good middle class jobs and as part of that we could resolve some of the middle and long-term questions about tax reform and entitlement reform, that would be a good thing for the American people.
CROWLEY: Yes, but when you’re talking infrastructure and investments and in education, raising theminimum wage, certainly the first two are spending. They’re investments. But you call them — the Republicans, of course, say this is spending. So you want to do additional spending to create jobs and particularly in infrastructure, because that also helps businesses, et cetera.
But the question is do you foresee that new taxes — talking about a revenue shortage, and if you’ve got a slow economy, there’s only a couple of ways to – you know–
LEW: Just to like be clear on taxes, yes, I think we have some areas of emerging — not consensus, convergence of views. I think that there’s a broad sense that the tax code is too complex, that it should be simplified.
There’s a broad sense that there are loopholes and credits that make the system unfair and distort the economy.
I think there is a bit of a gap between Democrats and Republicans where Democrats want to take the process of tax reform and use some of the benefits to both lower rates and to reduce the deficit so that the pressuredoesn’t come on all these other things that are really important for our future. Republicans would like to use all of the proceeds to reduce tax rates.
I think that we have a growth agenda. We have a plan and ideas that what it takes to have a strong economy in the future. And I hope if we can have that debate, we can maybe bridge this gap.
CROWLEY: Talk to me about Janet Yellen. Do you think she would make a good Fed chair?
LEW: You know, Candy, I’m not going to comment on discussions that — regarding the leadership of theFed. I think that I’ve got to start by saying, you know, Chairman Bernanke has been an extraordinary Fed chairman. He will be remembered when he’s done — and he’s not done; he is the Fed chair today — as somebody who did a great deal to save the U.S. and the world economy.
There will be the right time for discussions about a successor. And frankly–
CROWLEY: Well, still–
LEW: — and we will keep those discussions to the privacy of the oval office.
CROWLEY: We’re told there’s quite a back-and-forth and some political push-and-pull between those — and we know you’ve gotten — the president has gotten letters saying, hey, appoint Janet Yellen and Larry Summers is the other person involved in this, and there’s quite a lot of push-and-pull behind the scenes.
Is that true or not true?
LEW: I know the two people you’ve asked about very well. They’re both friends and I have great admiration for both of them. I’m going to keep the conversation about any future decisions here where it belongs.
CROWLEY: Would they both make good Fed chairs?
LEW: I think they’re both extraordinarily talented people.
CROWLEY: That’s not exactly that they would both make good Fed chairs.
LEW: I’m not going to comment on the Fed.
CROWLEY: Let me ask you about the debt ceiling. When will we hit it?
LEW: You know, I think Washington pays entirely too much attention to trying to figure out the day we run out —
CROWLEY: I don’t need to know the day, just circa, when do you think that is going to be near that?
LEW: I’ve said publicly that we can get through Labor Day. Obviously, as we get closer, we’ll have a better sense. There’s a great deal of danger of trying to pinpoint — Congress should act immediately. Let’s remember, we hit the debt ceiling in May. We’ve been using extraordinary measures since May to pay our bills.
We’ll do that for as long as we can. There’s the risk of trying to focus on the day that you might get it wrong. And Congress shouldn’t wait till the last minute. They should just raise the debt limit and take away any cloud of uncertainty about the ability of the United States to pay its bills.
CROWLEY: You know Eliot Spitzer, I’m assuming. You know a lot of the same people, I’m assuming. He knows a lot about Wall Street. He’s running for city comptroller in New York. What do you think?
LEW: I actually don’t know Eliot Spitzer very well.
CROWLEY: You think from his qualifications he seems like a guy that ought to be able to handle New YorkCity and Wall Street?
LEW: I’m going to concentrate on national policy, not New York politics.
CROWLEY: (laughter) you won’t even do national politics.
OK, finally, Bank of England has decided to put Jane Austen on the 10-pound note. In the U.S., we’ve never had a woman; we’ve never had an African-American on any of our money, and this is now because England has now done this.
Do you think it’s time we considered maybe putting a woman or an African-American on paper money in the U.S.?
LEW: Well, obviously we have had a woman on currency —
LEW: — on the coins, Sacajawea was on the dollar coin. You know, the question of changing currency is something that I actually have not had a huge amount of time to deal with, given the many things that I’ve been dealing with as Treasury Secretary. I look forward, as I have a chance to think it through, what the future of currency should be in many ways.
CROWLEY: Well, now that you’ve got your signature figured out, you know, next year it’ll look at shrinking the money and that kind of thing. But —
LEW: I’ve been working on my signature for a lot longer.
CROWLEY: Thank you so much for stopping by.
LEW: Great to be here with you, Candy.
CROWLEY: Treasury Secretary Jack Lew.
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